METALS AUSTRALIA LTD — Capital/Financing Update 2017

Jan 11, 2017

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ASX Announcement

12 January 2017

Metals Australia Commences Drilling at Greenfield and Resource Extension Targets at the Manindi Zinc Deposit

Highlights:

• MLS has commenced a 600-metre diamond drilling program at the Manindi Zinc Deposit

• The four-hole diamond drilling program is the first phase of a drilling campaign designed to test the extent of the zinc mineralisation at Manindi and to delineate extensions of the mineralised zone along strike of the main deposit

• One hole is planned at Kultarr Deeps to test the mineralisation below the existing mineralised structure, which given its location directly below and along strike from the Kultarr mineralisation, is a high priority drill target

• Two holes have been designed to test the mineralisation potential at two of the nine targets which were identified by previous Electromagnetic (EM) and geophysical surveys, with one hole to be drilled into each of the targets identified at Kaluta and Dibbler

• The fourth hole has been designed to test a newly identified highly conductive target which is interpreted to be a capture zone for further mineralisation

• A ground EM survey will be carried out within the next two weeks prior to the drilling of the newly identified target

• Zinc prices have jumped to their highest in more than eight years currently sitting at approximately US$2,600/t. The price of zinc has increased by approximately 90 per cent since a six-and-a-half-year low of US$1,444.50 in January 2016 as a result of fears over shortages due to mine closures

Diversified metals exploration company, Metals Australia Ltd (ASX: MLS ) is pleased to announce that the Company has commenced its first phase exploration diamond drilling campaign at high priority resource extension and greenfield targets at the Company’s Manindi Zinc Deposit, located in Western Australia.

The Manindi Project is located in the Murchison District of Western Australia, 20 km southwest of the historic Youanmi gold mine. The project is located on three granted mining licences and contains a high-grade zinc deposit.

Manindi is considered to be a volcanogenic massive sulphide (VMS) deposit, comprising a series of lenses of zinc-dominated mineralisation that have been folded, sheared, faulted, and possibly intruded by later dolerite and gabbro.

The style of mineralisation is similar to other base metal sulphide deposits in the Yilgarn Craton, particularly Golden Grove near Yalgoo to the west of Manindi, and Teutonic Bore-Jaguar in the Eastern Goldfields.

The current estimated mineral resources at the Manindi Zinc Project, in compliance with JORC (2012) are:

1.076Mt @ 6.52% Zn for 70,102 tonnes of contained zinc metal

(at a cut-off grade of 2% Zn)

Refer to the table below setting out the categories of the mineral resource for the Manindi Zinc Project.

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Drilling Commenced at Resource Extension Targets and Greenfield Targets

Following a review of existing data, the Company has recently mobilised a drill crew and commenced the first phase diamond drilling activities at Manindi in an effort to delineate and identify additional resource tonnage potential at the project.

An increase in the resource tonnage at Manindi will greatly improve the potential economics of the project and will assist the Company in better defining the next stage of development for this high-grade zinc deposit.

The first phase of diamond drilling at the already identified high priority resource extension and greenfield targets at Manindi is currently underway and consists of a four-hole diamond drilling program. Each drill hole has been designed to either test for depth extensions of the main Manindi mineralised structure or to test for new zinc and copper mineralised zones.

This current drilling program is the first phase of an expansive drilling campaign to take place at

the Manindi zinc project.

The first phase drill program is expected to take approximately 1 month to complete. A second phase of exploration diamond drilling will be completed at Manindi to test the remaining untested targets and to supplement this current program.

Kultarr Deeps

A diamond drill hole is planned at Kultarr Deeps to test the mineralisation below the existing structure, which given its location directly below and along strike from the main Kultarr mineralisation, is a high priority drill target.

This drill hole will confirm the presence of mineralisation at depth where the Company will then plan additional drilling.

Various phases of TEM surveying dating back as far as the 1970s have identified this highly conductive zone, which hosts the main Kultarr mineralisation. The 2012 VTEM survey and followup FLTEM survey showed that this zone extends to at least 1,000m vertically below surface. The deepest drilling only tests to a maximum of 300m vertical below surface.

Given its location directly below and along strike from the Kultarr mineralisation, which is also highly conductive, this is a very high priority drill target.

Kaluta and Dibbler

A further two diamond drill holes have been designed to test the mineralisation potential at two of the nine targets which were identified by previous Electromagnetic ( EM ) and geophysical surveys, with one hole to be drilled into each of the targets identified at Kaluta and Dibbler.

Kaluta

This target was identified by the 2012 VTEM survey, and refined by follow-up FLTEM in the same year. Kaluta is a relatively large untested highly conductive body. The 3D model is at least 70m by 600m in surface area. Potential thickness is unknown at this stage, but the tonnage potential is significant. The target starts at just 30m below surface, where it resolves into several discrete bodies then plunges shallowly, at approximately 25 degrees at an azimuth of 290 degrees. It is located close to the Wombat Cu-Ni soil anomaly and is coincident with a deep-rooted magnetic body comparable to the setting of the Manindi mineralisation.

The Kaluta EM anomaly was first identified by Western Mining Corporation (WMC) in 1974. Drill testing was attempted, but modern TEM surveying and 3D processing have confirmed that the conductor was not effectively drill tested at the time.

Kaluta is the highest ranked target because it is highly conductive, it is potentially large in size, it is coincident with a strongly magnetic body with a similar geological setting to the existing Manindi mineral resource, and it is completely untested by drilling.

Dibbler

This TEM conductor is located 300m east of Kowari, coincident with a magnetic trend similar to, and parallel to the Manindi trend. It may represent a new mineralised horizon lower down in the volcanic sequence to the main Manindi position, or possibly mineralisation remobilised into the footwall gabbro. This would be expected in a typical VMS target model. Although this conductor is relatively small at its top, it may represent the top of something larger, which develops at depth.

Dibbler was identified by historic EM surveys. A shallow percussion hole was drilled by Esso Exploration and Production Australia Inc. in 1984 over the conductor. Modern 3D modelling indicates that the hole failed to test the conductor. The hole was terminated at 39m in +300ppm copper. The Manindi deposits are typically surrounded by an alteration halo containing +250ppm copper, so this is a very positive sign for Dibbler.

Newly Identified EM Target

This target has only recently been identified by detailed interpretation of structures and EM signatures.

A ground EM survey is planned to commence in the next two weeks at the newly identified target which will be completed prior to the drilling at this target.

The results of the ground EM survey will assist the geological team in better defining the orientation of the drill hole and will provide a greater understanding of the potential geological structure at depth.

Following the completion of the ground EM survey, a diamond drill hole has been planned which has been designed to test the mineralisation potential of this highly conductive zone which is interpreted to be a capture zone for further mineralisation.

Commenting on the commencement of the diamond drilling program, Director of Metals Australia, Gino D’Anna stated:

“We are very excited to have started drilling at Manindi. The Company is well positioned to take advantage of the buoyant market for zinc and we have now complemented our asset portfolio with the acquisition of our Quebec graphite and lithium projects. We believe that 2017 is going to be a big year for MLS and we are firmly focused on delivering enhanced shareholder returns.”

For more information, please contact:

Gino D’Anna Director Metals Australia Ltd M: +61 400 408 878

James Moses Media and Investor Relations Mandate Corporate M: +61 420 991 574 E: james@mandatecorporate.com.au

Competent Person Statement

The information in this announcement relating to geology, exploration results and the mineral resource estimate is based on information compiled by Mr Dean Goodwin, who is a consultant to Metals Australia Ltd. Mr Goodwin is a member of The Australian Institute of Geoscientists, a Recognised Professional Organisation by the Australian Joint Ore Reserves Committee, and has sufficient experience relevant to the style of mineralisation and types of deposits under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2012 edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results. Mr Goodwin consents to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.